The content is accurate at the time of publication and is subject to change.
Establishing and keeping a good credit is a trust builder. Having a credit card is not bad. It always depends on the user, should they ever abuse their privileges upon owning one. If you can, it is better to maintain just one credit card. It is easier to manage if you only have one. But if you wish to take out another card, make sure that you are financially capable of paying for it. If you are already in trouble with just one card, then chances are you`ll have trouble with the new one.
People who have severe financial problems can be traced back from the manner they used their credit power.
Thinking of applying for a credit card? Here are some tips you can use to ensure that your credit record remains in the A-list.
Be very consistent in using your name. Include your generation (Jr., II, IV, etc.). If you use your middle initial in signing papers, then use it every time for consistency. If your credit record is shot, then you can`t shop around without having enough money with you. The good news is that even when you have the worst credit history, some companies offer cards which are preapproved for gasoline and department stores.
Apply for credit only when you can afford it. Don`t be swayed by credit gimmicks. Some credit cards offer good deals (rewards, etc) but a card with low interest rate is still your best choice. Rebates, free miles and other perks should be evaluated. Don`t sign up for cards based on perks alone. You must consider the other terms. Some credit cards will allow you to earn cash back, free air miles, discounts and other bonuses, in exchange for higher interest rates or thousands of dollars in expenses. In this case, it is best to go without the perks and use the money you save by purchasing the items you need. Of course, the easiest tip to follow is to avoid high interest rates. Credit card companies are required by law to disclose interest rates, but in many instances, they disclose only the lowest rates. Unfortunately, these rates are not as straightforward as most people think, hence it is best to contact the company offering the card and ask the different terms for every account. Also, you should always look at the Annual Percentage Rate (APR), which shows the annual fees you have to pay. The APR includes the amount of interest, transaction fees, and other charges.
Also, some accounts offering low rates are just introductory rates. After a certain period of time, interests will go up, and this could ultimately affect the total amount you will have to pay. Also, it is best to find out early how much charges you`ll need to pay for cash advances and late payments. This way, you`ll know how flexible the account is and you won`t be caught off-guard.
Lastly, it is important to discover if your card how long the grace period a card offers. This is a period wherein your purchases are not charged with interest if you pay the bill in full.